Commentary on Political Economy

Thursday, 13 October 2011

Market Choice and Economic Science - Money as 'Measure' of Social Antagonism

In this series so far we have seen how money can play no role in bourgeois economics because it is an institutional measure of the level of social antagonism in capitalist society - not just between workers and capital, but also between capitalists and, in the guise of exchange rates, between national bourgeoisies. The antagonism between workers and capital is over the share of wages and profits in total output, and that between capitalists is over the distribution of profits amongst themselves. It is clear that because capitalism is based on the exploitation of living labour, on its violent reduction to abstract labour that can be "measured" fictitiously in terms of money (wages) which then represent equally fictitious aliquot shares of "total output" - because of this violent "political" need of capital to transmute magically what are use values (living labour and social resources) into fictitious abstract values (monetary calculations of social resources), capitalists must isolate and alienate individual workers from one another and from the means of production so that the entire fiction of the "free market", based on "free labour" and "free choices", can be maintained!

But the social antagonism of the wage relation infects not just workers. Above all it infects the capitalist class itself because the antagonistic "push" from workers (expressed in wage and conditions demands) forces individual capitals (not necessarily individual capitalists) into"competing" with one another not just over the distribution of profits, but also (what amounts to the same thing) over the distribution of the wage antagonism! In other words, each capital wants its own workers to be paid less and the workers of other capitals to be paid more so that they can consume more. The ideal for capital would be a pricing system in which the money wage could reflect as closely as possible the level of wage and social antagonism in a particular area of production. The reason why this cannot be done is quite simply that it is physically impossible to equate wages and antagonism because they are two categorically different things. But capitalists always try to mediate these potential conflicts in terms of all sorts of "policies" (incomes policy, investment policy, regulations over government spending, employment, industrial and environmental policies, and so on). Internationally, these inter-capitalist rivalries take the shape of disputes over trade and exchange rate policies - which is what we are witnessing right now between the US and China and Europe (Germany especially).

At a more theoretical level, we can see that capital always presents social activity in a dichotomy: on one side is the total level of "inputs" (social resources) which it claims are quantitatively and scientifically "scarce" and "measurable"; on the other are the "free choices" of consumers ("households") and investors ("firms") which determine the "relative distribution" of this total pile of "inputs" according to the "market price mechanism" - in terms of "supply and demand". We know that this is pure fiction because the "inputs" of an economy cannot be "priced" independently of their "relative market prices", which we do not and cannot know until "the market" (consumers and investors) decide by way of supply and demand what those "prices" are going to be! In other words, the "absolute constraint" of the "available inputs" can only be determined by the "free choice" of market participants!!! Even Blind Freddie could see the glaring contradiction in this proposition!

What we are arguing here is that bourgeois economics claims to be able to determine "scientifically" (through relative prices) the allocation of social resources to various uses for production....by means of the "free choices" of individual market participants! That this "miracle" is not possible is proven by the fact that the capitalist economy - far from being "scientifically" analysable and "managed" - is prone to very violent cycles and crises that are the product of the "undemocratic" manner in which the decisions about the allocation of social resources are made! And the lack of democracy extends to more than just workers, but to the entire society, including capitalists themselves whose "fratricidal" rivalries are increasingly threatening world peace.

The upshot of this discussion is to show that the capitalist economy is intrinsically antagonistic, and that this antagonism spreads from the base - the violence of the reduction of living labout to abstract labour that can be rewarded with dead objectified labour through the money wage - to the very vertex of the pyramid of suffering and exploitation that is capitalism. Because at the top of the pyramid are extreme and very violent rivalries between capitalists about the distribution of "profits", that is to say about who can appropriate the greatest amount of "monetised" social resources with the least amount of antagonism from workers and society! This is why all the national bourgeoisies in the world, as the conflicts among them mount, come to resemble a gang of bandits or a band of robber barons - from the Chinese dictatorship to the Russian oligarchs, from the Saudi sheikhs to the American plutocrats, from the Mexican narco-trafficants to the French and Italian prima donnas, from the German descendants of the pro-Nazi elite to....you name it. Cheers and good week-end.